Kan lays the groundwork for tax hike
Source: Agencies |
June 12, 2010, Saturday
|
Print Edition
Print Edition
JAPAN'S new prime minister warned yesterday that his country could face a financial mess like the one that has crippled Greece if it did not deal urgently with its swelling national debt.
While Japan is on firmer financial footing than Greece because most of its debt is held domestically, Prime Minister Naoto Kan's blunt talk appeared designed to push forward his agenda, which may involve raising taxes.
Speaking in his first address to Parliament after taking office on Tuesday, Kan said Japan, the world's second-largest economy, cannot continue to let government debt swell while state finances are under pressure from an aging and declining population.
"It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone," he said.
Japan has the largest public debt among industrialized nations at 218.6 percent of its gross domestic product in 2009, according to the International Monetary Fund.
Kan, who became Japan's sixth prime minister in four years after a short stint as finance minister, promised his government would work closely with the Bank of Japan to avoid an increase in deflation and would focus on developing a "strong and comprehensive" policy.
Kan has said he will also consider raising taxes, an issue he said previous governments had been too timid to face.
A social progressive and a fiscal hawk, Kan said he would announce further details of his economic growth plan later this month.
But he said he aims to have the economy grow by more than 2 percent annually by fiscal 2020.
After amassing a vast public debt and overspending to the tune of 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans by the first installment of a 110-billion euro (US$131 billion) rescue package from the IMF and the 15 other nations that share the euro currency.
Analysts said Kan's warning comparison with the recent development in Greece is an overstatement, since the Japanese investors who hold the majority of the government's debt are seen as long-term stakeholders who are less likely to bolt for other, more lucrative markets overseas.
"Greece had a huge public debt and huge overseas loans," said Hiromichi Shirakawa, chief economist at Credit Suisse Japan. "Japan has a trade surplus, and it's a major creditor nation. I don't think Japan's fiscal conditions are facing a similar crisis."
Instead of focusing too much on fiscal tightening, Kan should simply focus on growth strategy that works for Japan's matured economy as the nation's population continues to age and shrink, he added.
While Japan is on firmer financial footing than Greece because most of its debt is held domestically, Prime Minister Naoto Kan's blunt talk appeared designed to push forward his agenda, which may involve raising taxes.
Speaking in his first address to Parliament after taking office on Tuesday, Kan said Japan, the world's second-largest economy, cannot continue to let government debt swell while state finances are under pressure from an aging and declining population.
"It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone," he said.
Japan has the largest public debt among industrialized nations at 218.6 percent of its gross domestic product in 2009, according to the International Monetary Fund.
Kan, who became Japan's sixth prime minister in four years after a short stint as finance minister, promised his government would work closely with the Bank of Japan to avoid an increase in deflation and would focus on developing a "strong and comprehensive" policy.
Kan has said he will also consider raising taxes, an issue he said previous governments had been too timid to face.
A social progressive and a fiscal hawk, Kan said he would announce further details of his economic growth plan later this month.
But he said he aims to have the economy grow by more than 2 percent annually by fiscal 2020.
After amassing a vast public debt and overspending to the tune of 13.6 percent of gross domestic product in 2009, Greece was saved from defaulting on its loans by the first installment of a 110-billion euro (US$131 billion) rescue package from the IMF and the 15 other nations that share the euro currency.
Analysts said Kan's warning comparison with the recent development in Greece is an overstatement, since the Japanese investors who hold the majority of the government's debt are seen as long-term stakeholders who are less likely to bolt for other, more lucrative markets overseas.
"Greece had a huge public debt and huge overseas loans," said Hiromichi Shirakawa, chief economist at Credit Suisse Japan. "Japan has a trade surplus, and it's a major creditor nation. I don't think Japan's fiscal conditions are facing a similar crisis."
Instead of focusing too much on fiscal tightening, Kan should simply focus on growth strategy that works for Japan's matured economy as the nation's population continues to age and shrink, he added.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
